How to Approach Oshkosh Stock After Q4 Earnings Release?

Oshkosh Corporation OSK, which designs, develops, and manufactures custom-built vehicles and equipment, sent mixed signals to investors, with earnings declining year over year even as revenues continued to grow. It reported fourth-quarter 2025 adjusted earnings of $2.26 per share, which fell from $2.58 recorded in the year-ago quarter. Consolidated net sales rose 3.5% year over year to $2.69 billion. 

While near-term pressure in the Access segment remains a concern, strength in Vocational and Transport, supported by a healthy backlog and improving margins, is shaping a more balanced outlook for the stock after the fourth-quarter earnings release.

Strong Performance in Vocational & Transport Units to Aid OSK

Assuming no recovery in nonresidential construction in 2026, the company expects adjusted EPS of about $11.50, up from $10.79 in 2025. EPS growth is driven by strong performance in the Vocational segment, supported by higher fire truck production and a growing NGDV ramp-up in Transport. A vocational backlog exceeding $6.6 billion provides strong revenue visibility, with segment operating margins expected to be around 17%, up from 14.6% reported in 2025. Transport sales are projected at approximately $2.5 billion, with operating margins of about 4%, up from 3.7 in 2025, as legacy fixed-price contracts wind down and NGDV production scales.

Oshkosh benefits from sustained momentum across major U.S. government programs, which offer durable revenue visibility. The company secured multiple contracts with the U.S. Army and continues to build FHTVs, reinforcing its position in tactical wheeled vehicles. Oshkosh also monetized JLTV-related software IP through a one-time license to the DoD, highlighting the value of its technology portfolio. 

Oshkosh has expanded its capabilities through strategic acquisitions, including AUSA to grow its presence in agriculture, JBT’s AeroTech to enhance air transport offerings and boost recurring revenues, and Hinowa to advance electrification and strengthen its European footprint. The company has also acquired CartSeeker Technology and invested in robotics to support long-term growth in automation.

The firm’s investor-friendly moves instill optimism. In January 2025, it hiked its dividend by 10.9% from 51 cents to 57 cents, which marked the 11th consecutive year of double-digit percentage increase. In the fourth quarter of 2025, OSK repurchased shares worth $119 million.

Falling Backlog, Weakness in Access Unit to Ail Oshkosh

Oshkosh’s consolidated backlog fell to $14.18 billion (approximately $1.28 billion in Access Equipment, $6.6 billion in Vocational and $6.18 billion in Transport) at the end of December 2025 compared with $14.74 billion in the year-ago period. Declining backlog, which indicates a drop in future sales commitments, is concerning.

Revenues in the Access segment are expected to decline year over year in 2026. For 2026, the company forecasts Access segment sales of $4.2 billion, representing a 6-7% decline from the prior year. With market conditions still weak in North America, revenues in the first half of 2026 are expected to trail 2025 levels. In addition, strong customer demand in the fourth quarter of 2025, following pricing actions in Access, is anticipated to weigh on first-quarter volumes.

Government dependence and supply-chain exposure increase operating risk. A portion of Oshkosh's net sales comes from the U.S. government, primarily through multi-year defense contracts. This exposes the company to risks related to government dealings, including economic uncertainty, policy changes and shifts in military and political dynamics. Supply chain challenges are also there. OSK’s reliance on third-party suppliers exposes it to supply shortages and price increases. Ongoing geopolitical tensions could result in disruptions in parts, materials and components procurement, elevating manufacturing costs.

Rising debt level to play spoilsport. Oshkosh’s long-term debt rose to $1.1 billion as of Dec 31, 2025, up from $599.5 million as of Dec. 31, 2024. Rising leverage could hurt the company’s ability to tap into growth opportunities.

Conclusion

Despite near-term challenges, Oshkosh’s strong earnings outlook, diversified end markets and solid execution in core segments enhance its prospects. Growth in Vocational and Transport, supported by a sizable backlog, margin expansion and the NGDV ramp-up, provides earnings visibility. 

Stable U.S. government programs, strategic acquisitions and investments in electrification and automation strengthen long-term growth prospects. Shareholder-friendly actions, including consistent dividend hikes and buybacks, further support investor confidence, helping offset Access segment weakness and rising leverage concerns. These factors, combined with its Zacks Rank #3 (Hold), make the stock worth retaining.

Stocks to Consider

Some better-ranked stocks in the auto space are Modine Manufacturing Company MOD, Ford Motor Company F and REV Group, Inc. REVG, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MOD’s fiscal 2026 sales and earnings implies year-over-year growth of 17.2% and 14.3%, respectively. The EPS estimate for fiscal 2026 has improved a penny in the past 60 days. The EPS estimate for fiscal 2027 has improved 9 cents in the past seven days.

The Zacks Consensus Estimate for F’s 2025 sales implies year-over-year growth of 0.3%. EPS estimates for 2025 and 2026 have improved 7 cents and 11 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for REVG’s fiscal 2026 sales and earnings implies year-over-year growth of 8.1% and 37.8%, respectively. EPS estimates for fiscal 2026 and 2027 have improved 20 cents and 26 cents, respectively, in the past 60 days. 

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This article originally published on Zacks Investment Research (zacks.com).

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